ROCKFORD — The city won’t cut funding to the public bus system after all.

Aldermen passed next year’s $129 million budget Monday, setting aside the full $1.5 million annual contribution to Rockford Mass Transit District and nixing a plan to cut funding by $100,000.

The city will tap about $2.5 million in reserves to close a projected spending gap. But while the reserves offer a temporary fix to rising salaries and the cost of doing business, either steeper cuts or revenue increases will likely be needed in the coming years.

Alderman Tom McNamara, D-3, amended the proposed budget Monday night to get rid of the proposed cuts to RMTD, which has a $13.5 million annual budget. City staff had recommended the cuts to help bridge a projected $2.5 million shortfall at City Hall.

Instead, aldermen will spend down a $5 million surplus in the sanitation fund, which built up in recent years as residents threw away less trash.

The city will use about $467,000 of the surplus in 2014, and aldermen are already eyeing up to $2 million for 2015.

The City Council will also spend about $2 million in health fund reserves to get through next year, leaving about three months worth of reserves in the fund.

The budget sets aside about $700,000 for an aggressive push to demolish up to 100 abandoned homes and will keep next year’s property tax levy flat. Nearly all city fees and licenses, including water bills, will rise 3 percent. And it allows for the police department to hire five more officers.

But the budget doesn’t include any additional funding for building, buying or renovating three new police stations.

The department has planned to decentralize from its Public Safety Building headquarters on West State Street for years, but city officials still haven’t decided where the department will move. Staff and council members have been reviewing options for three district headquarters in closed session for several months.

The budget assumes the police department will stay in the Public Safety Building for the year, even as rent is set to drastically rise.